Government bailouts, accounting scandals and regulatory uncertainty have all been blights on the Street of late. The real problem facing the finance industry, however, may be authoritarianism in the executive suite.
Authoritarian management style and culture is marked by rigid hierarchies, complicated bureaucracy, and managers who require total submission from their employees, demand adherence to strict edicts that only they can issue, become enraged when challenged, and discourage the input of underlings.
To most investment bankers and traders, this sounds like an average day at the office -- and, unfortunately, it is. Authoritarianism, often tied in with narcissism, is probably the most common management style on Wall Street, said Dartmouth Tuck School of Business Professor Ella Bell, a workplace expert and author of the book "CAREER GPS: Strategies for Women Navigating the New Corporate Landscape."
"Authoritarian managers have a remarkable ability to rise within organizations and set the tone for the entire culture," said Deirdre O'Donnell, an associate director of career development at Dartmouth's Tuck School of Business and a former banker at Lehman Brothers.
In highly subjective professions like those dealing with news or markets, authoritarianism is more often than not a management disaster that leads to talent departures, expensive training costs for new people, and pervasive organizational distrust, experts say. Authoritarianism comes in different flavors, said psychiatrist Dr. Roy Lubit, the author of "Coping with Toxic Managers, Subordinates...and other Difficult People."
A good example is one of Wall Street's most authoritarian managers, former Lehman Brothers chief Richard Fuld, whose bullying earned him the nickname "The Gorilla."
Fuld's disastrous decision not to listen to his head of fixed-income, Michael Gelband, may have accelerated Lehman's downfall. According to "A Colossal Failure of Common Sense," a book about the collapse of Lehman Brothers by Lawrence G. McDonald and Patrick Robinson, in 2005, Gelband told Fuld that the market for real-estate securities was softening and that he was worried about Lehman's exposure. Gelband told Fuld Lehman was likely to lose money. His frankness fell on deaf ears and drew political penalties. In 2007, Gelband grew tired of being thwarted by Fuld and quit the firm along with several others. (The postscript: In 2008, Fuld hired Gelband back because he was one of the few people with any ideas about how to handle Lehman's real-estate disaster.)
Fuld wasn't the only one.
Former Merrill Lynch chief executive E. Stanley O'Neal was well-known for his ivory tower management style and that he surrounded himself with "yes" men. O'Neal completely missed the fact that his firm was one of the primary underwriters and buyers of toxic mortgage securities that were unable to be sold. By the time O'Neal found out, it was too late to fix the problem.
Authoritarians, particularly of the narcissistic kind, have several characteristics that allow them to rise within investment banks, and even more so in a recession when people are fighting for their jobs, said Lubit.
According to Lubit, they are drawn to prominent positions and believe they are better than those around them. He has to believe he's better than everyone, or else he believes he's not better than anyone, Lubit said. "An authoritarian doesn't want to be surrounded by the best people, because they don't like to be challenged and need to be at the center of everything," he said.
Identifying an authoritarian boss is easy. Here are a few things to look out for.
Fragile Ego: Narcissistic authoritarians often have fragile egos that have to stay well-fed, Bell said. They will take no-holds-barred action against anyone who threatens their ego -- whether a peer or a subordinate -- through a variety of strategies, ranging from stealing credit to sabotage to open deceit. They may make an effort to hide or misrepresent an employee's accomplishments and take the credit themselves, particularly if they perceive that the employee is skilled enough at his or her job to threaten his position in the organization. "Some people say, 'I'm going to be honest with you.' These people don't last as long with an authoritarian boss," said O'Donnell.
Mr. Hyde: Another key characteristic of such types, Lubit said, is that they often have a Jekyll-and-Hyde personalities: They manage upwards well while they abuse, bully or ignore subordinates. Higher executives often remain unaware of what's happening. "There's a tremendous tendency to give credit to the manager of the group and blame underlings," Lubit said. "Companies are very bad at telling who's really good and who's a self-promoter."
Subordinates: Under authoritarian bosses, employee turnover is higher than it is in an organization as a whole, and the people who leave are often highly skilled.
Rule by fear: O'Donnell says to look for the basic Machiavellian mandate. "His reputation will precede him," and many in the organization will avoid working with him.
Don't Expect Promotions: Authoritarians rarely share their skills or what they know- at least, not on purpose, said Lubit. If they find someone good, they will want that person's work for the greater glory of their own group and thwart other managers from talking to or approaching them.
"Given the choice between the efficiency of the organization or getting glory of their group, they will always choose the latter," Lubit said. There are some exceptions: Authoritarians will sometimes take someone they recognize as a "baby shark" as a protégé, said Bell.
Mean Girls: Authoritarians, out of their own insecurities, create social systems that they can control. They are also invariably bullies, although their bullying may be done through derisive comments rather than loud pushing. Narcissistic authoritarians will always choose someone in their group as the designated doormat. Because the leader knows he is disliked, he will also favor someone else with a more ingratiating personality as the designated mole or informer whose job is to feed information about other group members back to the leader, mainly to discourage any coups. "It's not just the boss who's the saboteur; he's got people on the ground who are saboteurs as well," O'Donnell warns. "They do that by becoming the confidant of the boss and feeding him information." By destabilizing relationships among team members, the narcissistic authoritarian stays on top.
Dealing with Authoritarians
Most often, people who are working under such bosses throw up their hands and quit, noted the experts. But if people only want to get past the boss and not exit the organization all together, there are ways to deal with the situation, the experts say.
Get perspective: The experts advise employees to think of working for the authoritarian as a temporary assignment, and to approach it with the attitude of learning something from the experience at all costs. "Treat it as a sociological experiment," Bell advises. "Reframe that experience: What is your takeaway from this, how can I learn from this person, how can I succeed like they're suceeding?" She encourages people to remember, "this is a time-sensitive assignment, not for the rest of your life."
Don't be a doormat: Resist the bullying tactics often associated with narcissistic authoritarians. "They're looking for someone to put down, and if you show weakness, you will be their whipping boy," said Lubit. Don't be that person. If an authoritarian boss speaks to you disrespectfully, strongly signal politely that you won't accept that treatment. They'll move on to someone else. "You need to sit down with them and say, 'you can't do that.' Don't let them abuse you. If it's an authoritarian culture, you don't want to be eaten up and spit out," Bell says.
"You don't confront a grizzly bear," said Lubit. Authoritarians respond badly to authoritarian behavior, ironically. So, be polite but firm.
Deliver: Bell, Lubit and O'Donnell stress that authoritarians see themselves as people who deliver the goods, and likewise respect people who can do the same. That is some measure of protection. "They will develop a baby shark. If you don't see yourself as a baby shark, you have to make sure you perform," said Bell.
Hard Work Won't Save You: Surprisingly, Bell said, even though authoritarians respect hard work, it can also be the political undoing of their underlings. Someone who keeps their nose to the grindstone is likely to have a short tenure under an authoritarian, she said. "You have to have a constellation of support so that people know who you are and what you bring to the table," Bell said. "This is where you need to have relationships with other senior managers."
Look for the No. 2: Many companies will try to avoid firing high-producing authoritarians by pairing them with someone who is kinder and who can run interference on people issues, notes O'Donnell. At Lehman Brothers, this was former president Joe Gregory. This person might be a good proxy with whom to bring up your concerns, but remember: they are not your friends. Don't tell them what you wouldn't want the authoritarian to know.
Keep records: Bell encourages employees to keep a thorough file of all their accomplishments - at home, not in the office. The employee can present the files at review time, when the authoritarian is most likely to try to take away credit. The employee should also keep records of the authoritarian's lapses in behavior, and if they become numerous enough, try to find a sympathetic ear among higher management.
To companies, the toll of letting authoritarians run rampant is often "chaos," and costly departures of skilled people working under authoritarian bosses, according to Lubit.
"People get frustrated, they get burnt out, and their self-esteem drops because they keep asking 'what's wrong with me,'" said Bell. "The people in investment banking are extremely bright and competitive by nature. But after a while, it does make a difference and it does take its toll. People who don't have those personalities will leave."
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